Microsoft Buys ‘Minecraft’ Maker for $2.5 Billion

It’s official: Microsoft said Monday morning that it’s buying Mojang, maker of the popular “Minecraft” video game, for $2.5 billion.

The Mojang team will join Microsoft Studios, maker of games such as the “Halo” and “Forza” franchises, according to a Microsoft news release.

“Microsoft’s investments in cloud and mobile technologies will enable ‘Minecraft’ players to benefit from richer and faster worlds, more powerful development tools, and more opportunities to connect across the ‘Minecraft’ community,” the company said in the news release.

Microsoft said it expects the acquisition, which is expected to close in 2014, to be break even in fiscal year 2015.

“Minecraft” has had more than 100 million downloads on PCs alone since its launch in 2009. It is the most popular online game on Xbox and the top paid app on the iOS and Android platforms in the U.S., Microsoft said.

“The ‘Minecraft’ community is among the most active and passionate in the industry, with more than 2 billion hours played on Xbox 360 alone in the past two years,” the company said in the news release. ” ‘Minecraft’ fans are loyal, with nearly 90 percent of paid customers on the PC having signed in within the past 12 months.”

Phil Spencer, head of Xbox and Microsoft Studios, said in a blog post Monday morning: “We respect the brand and independent spirit that has made ‘Minecraft’ great, and we’ll carry on the tradition of innovation to move the franchise forward. …

” ‘Minecraft’ adds diversity to our game portfolio and helps us reach new gamers across multiple platforms. Gaming is the top activity across devices and we see great potential to continue to grow the ‘Minecraft’ community and nurture the franchise. That is why we plan to continue to make ‘Minecraft’ available across platforms – including iOS, Android and PlayStation, in addition to Xbox and PC.”

Mojang is a small, independent game developer studio based in Stockholm, Sweden. Last year, the company made a profit of $128 million on $360 million in revenue, according to The Wall Street Journal, which first reported last week that Microsoft was considering the purchase.

“Change is scary, and this is a big change for all of us,” the Mojang team wrote in a blog post Monday morning, seeking to reassure the community of “Minecraft” players. “It’s going to be good though. Everything is going to be OK.”

Mojang agreed to be acquired, the game studio said in the blog post, because “Minecraft has grown from a simple game to a project of monumental significance. Though we’re massively proud of what Minecraft has become, it was never Notch’s intention for it to get this big.”

Markus Persson, known by gamers as “Notch,” is the creator of “Minecraft” and Mojang’s majority shareholder. According to the Mojang blog post, Notch decided:

“He doesn’t want the responsibility of owning a company of such global significance. Over the past few years he’s made attempts to work on smaller projects, but the pressure of owning ‘Minecraft’ became too much for him to handle. The only option was to sell Mojang. …

“There are only a handful of potential buyers with the resources to grow ‘Minecraft’ on a scale that it deserves. We’ve worked closely with Microsoft since 2012, and have been impressed by their continued dedication to our game and its development. We’re confident that ‘Minecraft’ will continue to grow in an awesome way.”

The company said it expects most of Mojang’s employees to remain there for the time being, though Mojang’s three founders — including Persson — are leaving.

This is Satya Nadella’s first major acquisition since becoming Microsoft CEO in February.

In a July memo, in which Nadella outlined his vision for the company, he said the company would focus on “digital work and life experiences that are reinvented for the mobile-first and cloud-first world.”

“The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming,” he said in the memo.

Given Nadella’s vision, the “Minecraft” acquisition is important to Microsoft’s mobile strategy, IDC analyst Al Hilwa said in an email Monday morning.

Hilwa continued:

“Microsoft is a mobile ecosystem owner and has no choice but to keep building it if it is to maintain its relevance in the long term. … ‘Minecraft’ strengthens Microsoft’s hand in the battle with Google, Apple and Amazon. … ‘Minecraft’ is a solid business with intense user loyalty. That it can be purchased with overseas cash is also a part of the attraction, but its strategic value is that it is another brick fortifying Microsoft’s consumer services, a key lever in its mobile relevance. Gamers on other platforms will demand ‘Minecraft’ for some time to come…

“Successful and sticky games like ‘Minecraft’ are powerful strategic consumer services for their owners. Microsoft is wise to build up its services assets to make its mobile platform more compelling.”